S.K.S.K.VimalanathanVimalanathan. IRS. IRSAdditional DirectorAdditional Director

RISK MANAGEMENT DIVISION, MUMBAIRISK MANAGEMENT DIVISION, MUMBAIwww.icegate.gov.inwww.cbec.gov.in

CENTRAL BOARD OF EXCISE & CUSTOMSCENTRAL BOARD OF EXCISE & CUSTOMS

Risk Management System (RMS)Risk Management System (RMS)

in Indian Customsin Indian Customs

Customs Continuum

• Faster Clearance

• Lower Transaction

Cost

• High Service

Standards

Powered by:

• Data Analysis

• Information Exchange

• National & Global

Security

• Public Health &

Safety

• Revenue Protection

Enablers

We all Know:

Revenue Collection and Securing Borders through:

Risk Management System (RMS) aimed at Risk Management System (RMS) aimed at segregation of import consignments in to segregation of import consignments in to two categoriestwo categoriesHigh risk High risk –– Application of Customs controlsApplication of Customs controlsLow risk Low risk -- FacilitatedFacilitated

Received Prime MinisterReceived Prime Minister’’s award for s award for excellence in Public Administration.excellence in Public Administration.

Functions of CustomsFunctions of Customs

•• Collection of Customs DutyCollection of Customs Duty

•• Enforcement of various provisions of Customs laws Enforcement of various provisions of Customs laws governing Imports and Exportsgoverning Imports and Exports

•• Discharging agency functionsDischarging agency functions

•• Prevention of smuggling including drug traffickingPrevention of smuggling including drug trafficking

•• International passenger processingInternational passenger processing

Import Declarations

Value >0.1million

Submission of DeclarationImporter RMS

Message to BankFor duty

No

Appraising Officer

Value < 0.1 millionBE/ Challan

Print AC

Goods Registration Examination Out of Charge

Print Bill of EntryRelease of goods

Factors in Customs ClearanceFactors in Customs ClearanceIncreased foreign Trade and the consequent increase in volume ofIncreased foreign Trade and the consequent increase in volume oftransactionstransactions

0.5 million during 1997 (EDI launched)0.5 million during 1997 (EDI launched)33 million million import declaration filed import declaration filed last yealast yearr

Steady increase in number of importers Steady increase in number of importers –– at present over 0.4 Millionat present over 0.4 MillionProliferation of preferential trade agreements Proliferation of preferential trade agreements --12 agreements12 agreements

Bilateral / Regional / MultiBilateral / Regional / Multi--LateralLateralMultiplicity of tax slabs and types of dutiesMultiplicity of tax slabs and types of duties

62 effective rates62 effective rates11 different duties11 different duties15000 Tariff entries at 8 digit level15000 Tariff entries at 8 digit level

Large no. of duty exemptions Large no. of duty exemptions –– including export promotion schemesincluding export promotion schemesLarge no. of regulatory controls Large no. of regulatory controls –– 32 Acts32 ActsLarge no of International Conventions E.g CITES, CWC, Basel, Large no of International Conventions E.g CITES, CWC, Basel, Rotterdam etcRotterdam etcNew challenges for EnforcementNew challenges for Enforcement

Enhanced Security threat and new avenues for commercial fraudsEnhanced Security threat and new avenues for commercial frauds

Customs ProcessCustoms Process PrePre--RMSRMS scenarioscenario

–– Assessment and audit of each import Assessment and audit of each import declarationdeclaration

–– Physical Examination of each Physical Examination of each consignmentconsignment

–– No organized institutional memoryNo organized institutional memory–– Diversity in assessment practicesDiversity in assessment practices

Conditions which facilitated RMS launchConditions which facilitated RMS launch

EDI and Automated work flowEDI and Automated work flowNational Import Data BaseNational Import Data BaseDocumentation of various risksDocumentation of various risksModus operandi circularsModus operandi circularsAlert NoticesAlert NoticesCirculars on Assessment PracticesCirculars on Assessment PracticesOffence cases data baseOffence cases data base

Domain expertise in ITDomain expertise in IT

10

Automated Customs Clearances with RMSAutomated Customs Clearances with RMS

E-Filing through ICEGATE

E- Payment & Delivery

Risk Management System

No Assessment

No Examination

Customs Risks in Indian contextCustoms Risks in Indian context

National securityNational securityPublic safetyPublic safetyEnvironmental safetyEnvironmental safetyPeoplesPeoples’’ sentimentssentimentsPolitical & Diplomatic standPolitical & Diplomatic standRevenueRevenue

Basic Approach to RMSBasic Approach to RMS

FacilitationFacilitation1. Active 1. Active -- ACPACP2. Passive 2. Passive --

EnforcementEnforcement1. Active 1. Active -- Targets, Interventions, Targets, Interventions,

Rules andRules and CCRsCCRs2. Passive 2. Passive –– RandomRandom

Post Clearance AuditPost Clearance AuditDecision support to operational staffDecision support to operational staff

13

Risk Management System ComponentsRisk Management System Components

Addressing known Risks through Addressing known Risks through Risk RulesRisk Rules

Intelligence based interdiction of consignments Intelligence based interdiction of consignments –– TargetsTargets

Compliance measurement tools Compliance measurement tools –– InterventionsInterventions

Random Random selection of consignments to cater to unknown selection of consignments to cater to unknown

risks.risks.

Compulsory Compliance RequirementsCompulsory Compliance Requirements ((CCRCCRss))

Post Clearance Compliance Verification by Post Clearance Compliance Verification by Post Clearance Post Clearance

Audit (Audit (PCAPCA) )

Decision support Decision support –– (Appraising and Examination Instruction)(Appraising and Examination Instruction)

Assured Facilitation Assured Facilitation -- Accredited Clients Programme (Accredited Clients Programme (ACPACP))

Characteristics of Indian RMSCharacteristics of Indian RMS

Optimal balance between facilitation and enforcementOptimal balance between facilitation and enforcementIn house developed In house developed –– No No ““off the shelfoff the shelf””Multi layered approachMulti layered approachIntelligence driven RMSIntelligence driven RMSRisk owners definedRisk owners definedACP = AEOACP = AEOPrioritizationPrioritizationAudit and System based controlsAudit and System based controlsFacilitation of compliant tradeFacilitation of compliant tradeOptimum utilization of human resourcesOptimum utilization of human resourcesDecision support to officersDecision support to officersMeet heightened expectation of stakeholdersMeet heightened expectation of stakeholders

RULES

CCR

NationalLevel

Targets /Intervention

LocalLevel

Targets /Intervention

ACP

Non ACP

Risk Management Division (NRM)

DGRI(Intelligence)

Sub NRM

LRM

Import Declaration

&IGM

EDI

Facilitation /No Customs

controls

Customs controls

RMS

Facilitation

Multi-layered approach in Risk Management System

DGoV

16

Progress of RMSProgress of RMS

Conceptualized in 2004Conceptualized in 2004Now in 51 locations covering 90% of import Now in 51 locations covering 90% of import cargocargoNew version of RMS launched on 04.06.10New version of RMS launched on 04.06.10National Average Facilitation : 46% in 2010National Average Facilitation : 46% in 2010--1111Extra Revenue Realized : Extra Revenue Realized : USD 204 millionUSD 204 million in in 20102010--1111No. of Accredited Clients : 250No. of Accredited Clients : 250Prime MinisterPrime Minister’’s award in 2008s award in 2008--0909

17

Benefits of RMSBenefits of RMSTo the TradeTo the Trade

Encouragement for voluntary complianceEncouragement for voluntary complianceReduced dwell time on Customs accountReduced dwell time on Customs accountIncreased same day clearancesIncreased same day clearancesReduced transaction costsReduced transaction costs

Demurrage costs reducedDemurrage costs reducedReduction in resources for Customs clearanceReduction in resources for Customs clearance

Direct delivery of cargoDirect delivery of cargoFacilitates justFacilitates just--inin--time (JIT) operations and best practices time (JIT) operations and best practices in Supply Chain Management (SCM)in Supply Chain Management (SCM)

Benefits of RMSBenefits of RMS

InternalInternalAddress risks uniformly and consistently Address risks uniformly and consistently Decision support Decision support Increased visibility Increased visibility -- uniform risk mitigation strategies uniform risk mitigation strategies Monitoring made easier through MIS reportsMonitoring made easier through MIS reportsAs a natural corollary of the aboveAs a natural corollary of the above

Individual discretion/arbitrariness reducedIndividual discretion/arbitrariness reducedAccountability of the officers increased Accountability of the officers increased Focus resources on what is riskyFocus resources on what is risky

Facilitated and nonFacilitated and non--Facilitated cargoFacilitated cargo

3.48

86.38

46.24

1.62

34.80

78.16

38.98

3.80

0.00

50.00

100.00

150.00

200.00

Aver age dwell time of Facilitated car go Aver age dwell time of non f acilitated car go

Dwell time study of facilitated and non facilitated cargo at JNCH

Reg is trat io n o f Go odso f Out o f Charge

Payment o f Duty toReg is trat io n o f Go ods

Assessment to Paymento f Duty

Submiss ion toAssessment

Percentage of time taken by CustomsPercentage of time taken by Customs

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

APR-0 9

MAY-09

JUN-09

JUL-0 9

AUG-09

SEP-09

OCT-0 9

NOV-09

DEC-0 9

JAN-10

FEB-10

MAR-

10

Percentag e o ft ime taken bycus toms -Facilitated cargo

Percentag e o ft ime taken bycus toms - Non-Facilitated cargo

Client FeedbackClient Feedback

““ ………….. the bills are getting facilitated under RMS the bills are getting facilitated under RMS to the extent of almost 98% which is really to the extent of almost 98% which is really excellent. This has helped us in clearing and excellent. This has helped us in clearing and moving the import consignments in less than moving the import consignments in less than 6~8 Hrs of container discharge from the 6~8 Hrs of container discharge from the Vessel ... reduced lead time clearance, no Vessel ... reduced lead time clearance, no multiple handling of the cargo, reduction in multiple handling of the cargo, reduction in transaction/logistic cost. Besides this, no transaction/logistic cost. Besides this, no pressure on port infrastructure facilities.pressure on port infrastructure facilities.”” –– ToyotaToyota KirloskarKirloskar

Client FeedbackClient Feedback

““ Prior to ACP (RMS) time taken to annexure Prior to ACP (RMS) time taken to annexure submission to bill of entry received was up to 3 submission to bill of entry received was up to 3 days and physical clearance used to take 2days and physical clearance used to take 2--3 3 daysdays………… Post RMS time taken to annexure Post RMS time taken to annexure submission to bill of entry received is only one submission to bill of entry received is only one day and physical clearance is conducted day and physical clearance is conducted generally on the same day.generally on the same day.”” ---- Embarkation Embarkation Headquarters of the Indian NavyHeadquarters of the Indian Navy

Recent AdvancesRecent Advances

Centralized ArchitectureCentralized Architecture

Second generation RMSSecond generation RMS

IPR ModuleIPR Module

Container Selection ModuleContainer Selection Module

RMS for exports (being implemented)RMS for exports (being implemented)

RMS for express cargo (being implemented)RMS for express cargo (being implemented)

““We donWe don’’t do different things but we do things t do different things but we do things differentlydifferently””

THANK YOUTHANK YOU